Summary: Stem Cell Lineage Determination (SCLD) is a necessary and important step required for successful regeneration of tissues lost due to disease or injury. Existing tissue engineering approaches employ the use of growth factors and morphogens along with relevant biomaterials to achieve SCLD. However, this approach to SCLD is limited by several factors such as dosage, delivery, ectopic activity, adverse immunological complications and aberrant differentiation. As a result of these limitations, the single morphogen system has either caused significant clinical complications (from FDA approved growth factors such as BMP2) or has failed to be translationally successful. The need of the hour is a replacement for this single morphogen/growth factor system that is biomimetic in nature and does not pose the same threats to translation. In this regard, the use of exosomes can be beneficial owing to their biomimetic nature, their ability to be endocytosed by recipient cells and their positive immunological reactions. However, two fundamental questions need investigation to aid the use of exosomes as nano biomimetic tools to achieve SCLD in regenerative medicine. They are: 1. Can exosomes be targeted to biomaterials for localized delivery? 2. Can exosomal composition be modified to induce tissue-specific SCLD? This application is an effort to bridge this knowledge gap. We propose to engineer targetability and lineage-specific functionality into exosomes to generate Functionally Activated Targeted Exosomes (FATE). In this application, we will use bone regeneration as a model system to study the generation, evaluation and application of FATE for regenerative medicine. We propose three specific aims to achieve this goal. In Aim 1, we will engineer exosomes with enhanced binding characteristics to ECM proteins type I collagen and Fibronectin to enable biomaterial-mediated site-specific targeting. In Aim 2, we will engineer osteoinductive functionality into the targeting exosomes using two distinct approaches and evaluate the resulting FATE in vitro. In Aim 3, we will evaluate the targeting and functionality of FATE generated in aim 2 in vivo in a critical size rat calvarial defect model. The successful completion of these studies will serve as proof-of-principle that cell-derived nano vesicles (exosomes) can be engineered to possess characteristics required to enhance SCLD for tissue-specific regeneration.